Mama's Pizza Shoppe Borrowed $8,000 at 9% Interest on May $\begin{array}{|l|l|l|}\hline \text { Interest expense } & 240 & \\\hline \text { Interest payable } & & 240 \\\hline\end{array}$

Multiple Choice

Mama's Pizza Shoppe borrowed $8,000 at 9% interest on May 1, 2018, with principal and interest due on October 31, 2019. The company's fiscal year ends June 30, 2018. What adjusting entry is necessary on June 30, 2018?

A) No entry.
B) $\begin{array}{|l|l|l|}\hline \text { Interest expense } & 240 & \\\hline \text { Interest payable } & & 240 \\\hline\end{array}$
C) $\begin{array}{|l|l|l|}\hline \text { Interest expense } & 120 & \\\hline \text { Interest payable } & & 120 \\\hline\end{array}$
D) $\begin{array}{|l|l|l|}\hline \text { Prepaid interest } & 120 & \\\hline \text { Interest payable } & & 120 \\\hline\end{array}$